Although the "Mad Money" host does considerable research, which includes investigating the pedigree of management, understanding the company's industry position, looking at strength of profit margins and more, one of the most influential metrics he always considers is something called the PEG ratio.

That may sound a little complicated, but Cramer says it's only one calculation away from the P/E ratio, which is likely familiar to most investors.

(For P/E ratio, take the price of a stock, P, and divide by its earnings per share, E. The result equals M, the multiple or price to earnings multiple.)

That's where growth enters the equation which ultimately determines PEG.

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Here's how it works.

"You just divide the P/E ratio (or multiple or M) by the long-term growth rate," Cramer said. That's the PEG ratio. That's all there is too it.

And once you determine the PEG ratio, Cramer says you have a metric that allows you to make a decision on somewhat absolute terms.

"My rule of thumb, a guideline that I've arrived at based on more than three decades of trading and investing, is that I don't like to pay more than two times a company's growth rate for a given stock, meaning any stock with a PEG ratio of more than 2 is too pricey for me."

"So if a company has a 10% growth rate, but it's trading at a P/E of 20 or more (that's 20 times earnings), I'm generally inclined to say that's too expensive."

Conversely, I consider any stock that's trading at less than one times its growth rate, meaning it has a PEG ratio of less than one, to be cheap.